Hi guys,
I would like to a obtain a $250,000 loan to buy an existing business.
I have no house, no security but I have $160k cash. I was wondering if I can do the following to obtain a $250k loan.
– Buy a flat worth $150k (I am not looking for an investment, just something to secure against the loan)
– Use the flat as security to obtain a $250k property investment loan but instead of buying another property I'll use to it to buy the business.Is this possible? The security value is lower than the investment loan so will I need a guarantor?
Or is there another way to obtain the $250k loan. I cannot get a business loan because the business does not declare income.
Regards,
Jeff.
no chance I am afraid. You cannot borrow more than the security property is worth.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Damm, is there any other way to get it?
Not unless you use the $160K as deposit to be the business and borrow the balance.
Alternatively ask the vendor if he will offer terms on the purchase.
Richard Taylor | Australia's leading private lender
Consider taking on a business partner
You could also try the "I work for the ATO, tsk tsk – but I'll keep quiet and give you a $160k to walk away no questions asked' approach : .
OK now that this is not possible. I have another option to consider.
My partner's parents are willing to put the PROPERTY INVESTMENT LOAN under their name.
They have a single income of $31,200.
House worth $380,000 still owing $40,000With the Property investment loan, do you need to have poof that your actually buying an investment property? Or does the money get transferred into your account?
M3
Assuming everything else you maybe able to take out a Line of Credit secured against their property in their name and they in trn lend the money to you at the same rate.
Most lenders are going to want to now what the purpose of the loan will be but done properly all should be ok.
Your mortgage broker should be able to point you in line with the most competitive deal which is right for your circumstances.
Richard Taylor | Australia's leading private lender
I've spoken to Westpac, they need to know the purpose of the loan…
I am affraid to state that the loan is for a business as I will then need to apply for a business type loan, which I assume is harder to obtain because the business I am buying is "trading at a loss".I orginally wanted $250k but would be happy with $100k..
Is there any other options?
M3 wrote:I've spoken to Westpac, they need to know the purpose of the loan…
I am affraid to state that the loan is for a business as I will then need to apply for a business type loan, which I assume is harder to obtain because the business I am buying is "trading at a loss".I orginally wanted $250k but would be happy with $100k..
Is there any other options?
[/quote
So the plan is to purchase a business that is defrauding the taxpayer by defrauding a lender and/or lumbering your parents in law with ultimate accountability for the debt.
Sweet.
M3 wrote:I've spoken to Westpac, they need to know the purpose of the loan…
I am affraid to state that the loan is for a business as I will then need to apply for a business type loan, which I assume is harder to obtain because the business I am buying is "trading at a loss".I orginally wanted $250k but would be happy with $100k..
Is there any other options?
Who is getting the loan? If it is your partner's parents, then they may be borrowing for investment purposes – they are lending the money to you, not buying a business.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
[/quote
So the plan is to purchase a business that is defrauding the taxpayer by defrauding a lender and/or lumbering your parents in law with ultimate accountability for the debt.
Sweet.
[/quote]
Well summed up!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Quote:Who is getting the loan? If it is your partner's parents, then they may be borrowing for investment purposes – they are lending the money to you, not buying a business.
Oh I see, would that work? hmmm, wouldn't the bank ask what type of investment? eg shares, property? If they say lending the money to me to buy a business, then wouldn't that constitute as a business loan?
Quote:So the plan is to purchase a business that is defrauding the taxpayer by defrauding a lender and/or lumbering your parents in law with ultimate accountability for the debt.
Sweet.
The previous owner is defrauding the taxpayer, what can I do? The bank is not going to lend money to buy a business with a "net loss" even though the business is easily making profit and can pay back the loan in 3 yrs. How do I explain that to the bank? impossible…
The business can still be profitable even with fully declared income, I do intend to declare income as I want to show a net profit to borrow more money.
My partner and I will be fully accountable for the debt, we will never do that to her parents.
I am not trying to commit fraud, I am just trying to find out how to get a $100k loan.
I'm running out of options… Does anyone have any suggestions?M3,
How do you know it's making money? If the owner is showing a loss to avoid paying tax, why do you think he is being honest with you?
If you are keen, you could get your accountant to do some sort of audit on the figures supplied by the owner. If the owner is keen to sell, he should allow the audit. If he doesn't, then you know something is up.
Appreciate your concerns Dan.
Audit is almost impossible and a waste of money. The books have been "cooked", artifically deflated revenue. That's the nature of the hospitality industry.
The only way to find out is to trial the business. There is a trial period for 2 weeks with the owner claiming trial revenue very close to the advertise revenue. I'm currently spying on the business prior to the trial period to ensure, the owner is not just getting his friends and relatives to come in and buy…..
Never trust anyone who tries to se
ll you anythingSo how do I get this loan? Anyone have any ideas?
M
Go back and reread all the posts. Especially yours – you were asking to borrow $250,000 based on a security of $150,000. It is a business purpose, but you don't want to tell the bank that because they won't lend. What else can you do?
Who is borrowing the money? you or your partner's parents?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
M3 wrote:My partner and I will be fully accountable for the debt, we will never do that to her parents.
If the loan is in her parents names, against their property, they are responsible for the loan. If your business fails and you can't pay them, they can't pay the bank, and the bank will take their house.
I have seen * a lot* of these sorts of deals turn to custard and, regrettably, they all start out with best intentions.
If you value your relationship with your partner and respect their parents, you should not take their money unless they get independent legal adice.
Quote:M
Go back and reread all the posts. Especially yours – you were asking to borrow $250,000 based on a security of $150,000. It is a business purpose, but you don't want to tell the bank that because they won't lend. What else can you do?
Who is borrowing the money? you or your partner's parents?
That was the original plan but it was not possible.. What else can I do? Thats why I'm asking.
My partner's parents are borrowing the money on behalf of me.
Yossarian If the business fails, I'll sell it at a lost and I still have my job and my partner will get a job to pay back the rest of the loan. I think you heard alot of these deals not seen… It's only 100k, the banks not going to take the house unless they miss repayments. They know the risk involved.
This is getting side track. I don't think I can get a proper answer. Line of credit as Qld007 suggested would be the best option I guess.
If your parents in law are borrowing money, then they are the borrowers, not you.
Make sure you set yourself up in the business correctly. Get proper advice and use a Pty Ltd company to limit liablity or you could lose everything if your business fails.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
M3 wrote:Quote:M
Go back and reread all the posts. Especially yours – you were asking to borrow $250,000 based on a security of $150,000. It is a business purpose, but you don't want to tell the bank that because they won't lend. What else can you do?
Who is borrowing the money? you or your partner's parents?
That was the original plan but it was not possible.. What else can I do? Thats why I'm asking.
My partner's parents are borrowing the money on behalf of me.
Yossarian If the business fails, I'll sell it at a lost and I still have my job and my partner will get a job to pay back the rest of the loan. I think you heard alot of these deals not seen… It's only 100k, the banks not going to take the house unless they miss repayments. They know the risk involved.
This is getting side track. I don't think I can get a proper answer. Line of credit as Qld007 suggested would be the best option I guess.
I work in the lending game. I haven't "heard", I've seen and done
They invariably follow the following pattern:
*child/child's partner want's money to great business opportunity (has existing business in trouble, expansion planned or buying new one) but has no cash.
*parents (generally loving,naive, optimistic and/or NESB) are keen to help.
*parents mortgage property on promise by child/child's partner that they will pay the bills no matter what happens
*business goes pear-shaped
*debts go unpaid as do parents/parents-in-law
*parents/parents-in-law fall behind on mortgage
*bank takes property
*legal bunfights ensueIf you can't buy it, don't.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
